November 24, 2020

The lockdown wasn’t sudden, we have been ready for the eventuality, says Amul MD RS Sodhi

The Gujarat Cooperative Milk Advertising and marketing Federation (GCMMF), popularly often known as Amul, is a farmer cooperative outfit that took roots in 1946, simply earlier than Independence. It was famously and efficiently led by Verghese Kurien, as a part of White Revolution. Now Amul is the nation’s largest meals product advertising and marketing outfit, with Rs 52,000 crore in income. The model, amid stiff competitors, has endured through the years. It has solely consolidated its place amid the pandemic.
GCMMF’s MD RS Sodhi speaks to
Malini Goyal about steering the corporate amid Covid-19 and lockdown, and the way a cooperative like Amul thinks in a different way from non-public corporations.

Edited excerpts:

We live by an unprecedented disaster. How tough has it been for you and Amul?

The lockdown was not 100% unprecedented for us as an organisation. Not many would keep in mind, through the late 1980s and the early 1990s, there have been curfews for months in Ahmedabad because it was witnessing many riots. Lockdowns have been frequent.

Individuals have been afraid to return out of their homes. Even at the moment, we labored with out disruption. This time the quantum and depth have been totally different. Then the lockdown was solely in elements of Ahmedabad and we had no know-how, telephone or web.

Had been you ready for a lockdown?

The lockdown didn’t come hastily. It was anticipated. We knew what was taking place in China. The truth is, we began getting ready virtually 10 days earlier than the lockdown. We’re in a vital enterprise. In addition to being a vital product, milk can also be a really reliable supply of livelihood for over 100 million folks. They’re largely marginal farmers and poor girls.

And in contrast to, say, wheat, it’s a every day crop that must be harvested twice every day.

I keep in mind, on March 17, we checked out totally different points of our operations like precautions, social distancing, sanitisation, invoicing and warehousing and figured how you can have a strong IT spine to hold out our operations easily. Anticipating disruption, we began stocking up merchandise in our 77 warehouses, transporting rather more than what we usually would. On the head workplace, we break up the staff into two, working in two units.

On March 24, when the PM introduced a lockdown, panic unfold. I used to be capable of choose up solely 200 gm of butter and milk. I realised that if I’m panicking then everybody else could be too. The very first thing I did was talk to the patron and the farmer. My two-minute video, recorded on my handset, was principally to reassure them. Communication with all our main stakeholders – farmers, transporters, sellers, retailers, customers, staff -was very vital. At the same time as we did face-to-face video calls with all our workers to align everybody, we additionally introduced a hike in incentives for everybody – as much as 40-50% of salaries. We additionally elevated our margin distribution. We doubled our communication with customers, ramping up our ads.


What has this pandemic taught you?

That meals is crucial factor. That there are benefits of being a multi-product, multi-location, multi-channel firm.

With 84 vegetation, when issues have been tough in Mumbai the place our four-five vegetation acquired affected, different vegetation labored extra time. Being a multi-product firm, whereas ice cream as a product was virtually completed, paneer consumption went up. Presence in a number of channels, too, had its benefits. Whereas the business and trendy format segments have been down, different segments like residential went up sharply. Whereas outof-home consumption was hit, dwelling consumption rose.

Pandemic has hit many companies. How has Amul fared?

There are a lot of issues we realised through the pandemic. That folks will purchase increasingly more branded merchandise. We additionally realised the significance of relationships with our clients. Our bonding strengthened.

Throughout Covid, meals consumption hasn’t gone down. The truth is, it has elevated. Whereas it was difficult, we made certain we confronted no disruption in manufacturing, provide and transport. In Gujarat, we began getting 17-18% extra milk throughout lockdown.

General, we might have gotten 40-50 lakh litre extra milk through the interval. In 100-120 days we’ve given Rs 18,000 crore further money to our farmers for further milk we procured.

How in a different way does a cooperative function from a non-public agency?

As a cooperative, small folks like farmers have come collectively to pool their assets, do processing and advertising and marketing.

The large distinction right here that our suppliers are additionally our homeowners. For any non-public firm the motive is to purchase as low-cost as potential and promote as costly.

Our motive is simply the alternative – purchase as pricey as potential and promote as low-cost. We develop our market primarily based on the quantum of uncooked materials we get. We have now to promote the product at such a worth that every one merchandise get bought and on the finish of the day there’s a minimal distinction between shopping for and promoting worth. Non-public corporations will all the time wish to maximise that distinction. In order a philosophy, our mission is to have minimal EBIDTA and preserve all stakeholders blissful. Give extra to earn extra.

Over time, we’ve labored exhausting to ascertain that equilibrium and earn our clients’ religion. And we are going to by no means short-change our clients.

How has Amul thrived amid a lot competitors, together with from MNCs?

We’re India’s largest FMCG firm with Rs 52,000 crore in revenues. We’re focusing on Rs 1 lakh crore by 2024-25. Over time, know-how has modified, opponents have modified.

What hasn’t modified is our DNA, our tradition and our aims. That’s our faith; that will not change. We’re a really profitable, modern and related Indian model. India will all the time stay the primary focus marketplace for us. India is right now the world’s largest and quickest rising marketplace for milk and the biggest milk producing market. So why deal with some other market?

We have now been rising at a steady 15% yearly. We have now just lately begun to take a look at edible oil enterprise. One Gujarat cooperative was shutting down and the state authorities wished us to assist restart the plant. That belt is wealthy in groundnut and sunflower. We’re studying the oil enterprise. It is a studying section.

We have now additionally arrange three-four bakery vegetation. However our enterprise focus will all the time be dairy.

How do you calibrate your product portfolio and what function do margins play in shaping your thrust on segments?

You may’t change your product portfolio merely due to margins. We won’t focus extra on cheese as a result of it has higher margins. Our precedence is to first present recent milk. Additionally, keep in mind, that in cheese whereas margins are extra, bills are also greater. In milk, the scope for scale is extra.

The Amul woman has endured for many years. She has typically taken on controversial matters too.

For the marketing campaign, we simply signal the invoice. That’s the solely function we play. For the final 40-50 years it has been round, we’ve given full inventive freedom to the company. She is somebody who doesn’t spare anybody or concern anybody.

Really, our promoting spend is small – simply 0.8% of our revenues. The Amul woman marketing campaign could possibly be simply 4-5% of our whole advert spend. However its distinctive inventive provides us quite a lot of visibility. Many occasions, PR businesses informed us to get celebrities and so forth. However for us that is working.

She (Amul woman) represents the temper of the nation. What’s the nation considering?

Over so a few years, she has all the time spoken the reality.

We’re a long-term model. You may’t measure efficiency on a quarter-on-quarter foundation and have knee-jerk reactions. As an organisation, we’ve consistency in every little thing, together with manpower. For a lot of of our staff, some right here for 20-30 years, that is their first job.